WASHINGTON/TOKYO — US President Donald J. Trump struck a trade deal with Japan that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods in exchange for a $550-billion package of US-bound investment and loans.

It is the most significant of a clutch of agreements Mr. Trump has bagged since unveiling sweeping global levies in April, though like other deals, exact details remained unclear.

Japan’s autos sector, which accounts for more than a quarter of its US exports, will see existing tariffs cut to 15% from levies totaling 27.5% previously. Duties that were due to come into effect on other Japanese goods from Aug. 1 will also be cut to 15%.

The announcement sent Japan’s benchmark Nikkei stock index climbing almost 4% to its highest in a year, led by stocks in automakers with Toyota up more than 14% and Honda nearly 11%.

“I just signed the largest TRADE DEAL in history with Japan,” Mr. Trump said on his Truth Social platform. “This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan,” he added.

Mr. Ishiba, who plans to resign after a bruising election defeat on Sunday, according to a source close to the embattled premier, hailed the tariff agreement as “the lowest rate ever applied among countries that have a trade surplus with the US”

The 68-year-old leader later said that reports that he had decided to resign were “completely unfounded.”

Two-way trade between the two countries reached nearly $230 billion in 2024, with Japan running a trade surplus of nearly $70 billion. Japan is the fifth-largest US trading partner in goods, US Census Bureau data show.

The US investment package includes loans and guarantees from Japanese government-affiliated institutions of up to $550 billion to enable Japanese firms “to build resilient supply chains in key sectors like pharmaceuticals and semiconductors,” Mr. Ishiba said.

Japan will also increase purchases of agricultural products such as US rice, a Trump administration official said. Mr. Ishiba said the share of US rice imports may increase under its existing framework but that the agreement did “not sacrifice” Japanese agriculture.

Bank of Japan Deputy Governor Shinichi Uchida called the deal “very big progress” and said it reduces uncertainty over the economic outlook.

Some economists had forecast the tariffs could have tipped Japan — the world’s fourth-largest economy — into recession.

The exuberance in financial markets spread to shares of South Korean carmakers, as the Japan deal stoked optimism that South Korea could strike a comparable deal. The yen firmed slightly against the dollar, while European auto shares and US equity index futures rose.

But US automakers signaled their unhappiness with the deal, raising concerns about a trade regime that cuts tariffs on auto imports from Japan while leaving tariffs on imports from their plants and suppliers in Canada and Mexico at 25%.

“Any deal that charges a lower tariff for Japanese imports with virtually no US content than the tariff imposed on North American-built vehicles with high US content is a bad deal for US industry and US auto workers,” said Matt Blunt, who heads the American Automotive Policy Council which represents General Motors, Ford and Chrysler parent Stellantis.

‘MISSION COMPLETE’
Autos are a huge part of US-Japan trade, but almost all of it is one-way to the US from Japan, a fact that has long irked Trump. In 2024, the US imported more than $55 billion of vehicles and automotive parts while just over $2 billion were sold into the Japanese market from the US

Japanese Finance Minister Katsunobu Kato told reporters the agreement made no mention of foreign exchange rates, another issue the Trump administration had long complained about.

Mr. Trump’s announcement followed a meeting with Japan’s top tariff negotiator, Ryosei Akazawa, at the White House on Tuesday.

“#Mission Complete,” Mr. Akazawa wrote on X, later saying the deal did not include Japanese exports of steel and aluminum that are subject to a 50% tariff, nor any agreement on defense budgets.

Japan will also drop additional safety tests currently imposed on imported US cars and trucks — requirements that Mr. Trump and other US officials have said limit the volume of American-built vehicles sold in the country.

A photo of Mr. Akazawa’s meeting with Mr. Trump at the White House indicated the two sides engaged in some last-minute negotiations over the investment package to seal the deal.

The photo posted on X by Mr. Trump’s assistant Dan Scavino, showed the president seated across from Akazawa with a document titled ‘Japan Invest America’ and a sum of “$400B.” The figure was scored out, with “$500” hand-written above it.

Japan is the largest investor in the United States. Together with pension giant GPIF and Japanese insurers, the country has about $2 trillion invested in US markets.

Besides that, Bank of Japan data show direct Japanese investment in the United States was $1.2 trillion at the end of 2024, and Japanese direct investment flows amounted to $137 billion in North America last year.

Speaking later at the White House, Mr. Trump also expressed fresh optimism that Japan would form a joint venture with Washington to support a gas pipeline in Alaska long sought by his administration.

Mr. Trump’s aides are feverishly working to close trade deals ahead of an Aug. 1 deadline that Mr. Trump has repeatedly pushed back under pressure from markets and intense lobbying by industry. By that date, countries are set to face steep new tariffs beyond those Mr. Trump has already imposed since taking office in January.

Mr. Trump has announced framework agreements with Britain, Vietnam, Indonesia and paused a tit-for-tat tariff battle with China, though details are still to be worked out with all of those countries. — Reuters

WASHINGTON — Indonesia has agreed to eliminate tariffs on more than 99% of US goods and scrap all nontariff barriers facing American firms, while the US will drop threatened tariffs on Indonesian products to 19% from 32%, the two countries said on Tuesday.

Trump hailed the deal, which he first announced on July 15, in a posting on his Truth Social media platform, calling it a “huge win for our Automakers, Tech Companies, Workers, Farmers, Ranchers, and Manufacturers.”

Details of a framework for the accord were released in a joint statement by both countries, and a fact sheet issued by the White House. They said negotiators for both countries would finalize the actual agreement in coming weeks.

“Today, the United States of America and the Republic of Indonesia agreed to a framework for negotiating an agreement on reciprocal trade to strengthen our bilateral economic relationship, which will provide both countries’ exporters unprecedented access to each other’s markets,” the statement said.

The Indonesia deal is among only a handful reached so far by the Trump administration ahead of an Aug. 1 deadline when higher tariffs are due to kick in.

The US tariff rate on Indonesia, Southeast Asia’s largest economy, matches the 19% announced for the Philippines earlier on Tuesday. Vietnam’s tariff rate has been set at 20%.

Under the agreement, Indonesia will immediately drop its plans to levy tariffs on internet data flows and it agreed to support renewal of a longstanding World Trade Organization moratorium on e-commerce duties, a senior Trump administration official told reporters on a conference call.

Indonesia also will remove recently enacted pre-shipment inspections and verifications of US exports that have posed problems for US agricultural exports and contributed to a growing US farm trade deficit, the official said.

The official, who was not authorized to speak publicly, said the agreement could help restore the surplus in agricultural goods that the United States once had with Indonesia, until it implemented the pre-shipment requirements.

In a win for US automakers, the official said Indonesia has agreed to accept US Federal Motor Vehicle Safety Standards for vehicles exported from the United States to the growing country of 280 million people.

Indonesia also has agreed to remove export restrictions on industrial commodities, including critical minerals, the joint statement said. The US official said it would also remove local content requirements for products using these commodities that were shipped to the United States.

The joint statement said the US would reduce the reciprocal tariff rate to 19%, and “may also identify certain commodities that are not naturally available or domestically produced in the United States for a further reduction in the reciprocal tariff rate.” No further details were provided.

The two countries said they would negotiate rules of origin to ensure the benefits of the deal accrue mainly to the US and Indonesia, not third countries.

They said Indonesia would work to address barriers for US goods, including through the removal of import restrictions and licensing requirements on US remanufactured goods or parts.

Indonesia also agreed to join the Global Forum on Steel Excess Capacity and take actions to address global excess capacity in the steel sector. — Reuters

WASHINGTON — US Federal Reserve Chair Jerome H. Powell is a “numbskull” who has kept interest rates too high, but he will be out in eight months, President Donald Trump said at a news conference on Tuesday.

“I think he’s done a bad job, but he’s going to be out pretty soon anyway. In eight months, he’ll be out,” he said from a meeting at the White House with Philippine President Ferdinand R. Marcos, Jr.

Mr. Powell’s term as Fed chair runs through May 15, and he has repeatedly said he will not leave the post early. Eight months would mean Mr. Powell would remain in place until mid-March; it was not immediately clear why Mr. Trump picked that time frame.

Mr. Trump has been hammering at Powell for months for not cutting rates and has frequently raised the possibility of ousting him, while also saying that firing him would be “unlikely.”

Lately, the White House has intensified Mr. Trump’s pressure campaign, launching a review of the Fed’s renovation of two buildings in Washington which they say are inappropriately lavish and may not have followed planning protocols, charges that the Fed vigorously rejects. Treasury Secretary Scott Bessent on Tuesday repeated his call for a “big internal investigation” of the Fed’s non-monetary policy operations.

Economists warn that efforts to push the Fed to loosen monetary policy could actually have the opposite effect.

They point to hyperinflation in countries from Argentina to Zimbabwe as examples of what can happen when politicians exert influence on central bank rate-setting. Some see evidence in financial markets that the Trump administration’s constant attacks on Mr. Powell are eroding confidence in the Fed’s ability to achieve its dual goals of price stability and maximum employment.

“Market participants seem to agree that the risk to Fed independence is rising,” Goldman Sachs economist Jan Hatzius wrote late on Monday, pointing to a rise in longer-term inflation expectations as captured in 5-year forward inflation swaps, which measure expected inflation over five years beginning five years out.

“A further increase could make Fed officials more reluctant to cut,” Mr. Hatzius said.

If inflation expectations rise, the thinking goes, actual inflation is likely to follow. Mr. Powell and other Fed officials believe that longer-term inflation expectations remain stable, but they say they are watching nearer-term measures closely, particularly with tariffs likely to increase upward price pressures as companies pass on more of the costs to consumers.

“Efforts by the administration to push the (Fed) into an accommodative monetary policy stance that would not be justified by macroeconomic conditions would likely backfire with higher long-term rates, higher inflation expectations, and ultimately the need for a tighter monetary policy stance,” Barclays economists wrote on Tuesday.

On Tuesday Mr. Trump repeated his view that the policy rate should be 3 percentage points (ppts) lower than it is now.

The central bank’s policy-setting Federal Open Market Committee is nearly universally expected to leave the policy rate in its current range of 4.25%-4.5% when it meets next week, as policymakers wait to see how inflation and employment react to tariffs.

“Our economy is so strong now, blowing through everything. We’re setzting records,” Mr. Trump said on Tuesday. “But you know what? People aren’t able to buy a house because this guy is a numbskull. He keeps the rates too high, and is probably doing it for political reasons.”

Mortgage rates had increased last year even as the Fed cut its policy rates by a total of 1 ppt, tracking US Treasury yields, which surged amid economic resilience and worries about Mr. Trump’s proposed policies.

Mr. Bessent, at the same meeting, raised a different complaint against the Fed.

“The Fed has had big mission creep, and that’s where a lot of the spending is going,” Mr. Bessent said. “That’s where, why they’re building these new, or refurbishing these buildings, and I think they have got to stay in their lane.” — Reuters